Japan slams door on “Karoshi” culture, embraces freelancer protections with new law
As of November 1st, 2024, Japan has ushered in a new era for its freelance workforce with the implementation of the “Freelance Act”. This groundbreaking legislation aims to bolster protections for Japan’s millions of freelancers, who make up 4% of its workforce.
But how did Japan’s work culture once epitomised by “karoshi” (death by overwork) manage to fast-track a law for the benefit of freelancers? How does Japan’s Freelance Act stack up against protections offered in more established freelance markets like the UK, EU, and US?
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Japan’s Freelance Act, officially known as the “Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators,” introduces several key provisions aimed at levelling the playing field for freelancers, according to a report in The Japan Times. These include:
- Mandatory written contracts: Requiring clients to provide clear contracts outlining scope of work, payment terms, and deadlines. This combats the issue of vague agreements and late payments, a common complaint among freelancers globally.
- Payment within 60 days: Obligating clients to pay freelancers within 60 days of completing work. This tackles the pervasive problem of delayed payments that can cripple freelancers’ financial stability.
If companies violate the new law, first-time offenders may receive an administrative warning from the government, while repeat offenders will have to pay a fine of up to ¥500,000 which is about £2530.50. The authorities can also disclose the names of offenders and add them to what is colloquially called the “black companies list.”
Protection against unfair contract terms: Prohibiting clients from imposing unreasonable demands, such as last-minute changes, excessive revisions, or arbitrary payment reductions.
Consideration for family circumstances: Mandating clients to consider freelancers’ needs related to pregnancy, childcare, and elder care for those engaged in long-term projects.
Japan’s younger generations are not adapting well to Japan’s traditional work culture, which can mean being micro-managed, underpaid and seriously overworked. They are looking to work abroad in countries such as Canada and Germany, according to reports. This exodus of talent is what is propelling laws like the Freelance Act in Japan.
With more freedom to work flexible hours as a freelancer in Japan and now with greater protections, perhaps Japan’s worker shortage shouldn’t be such an issue after all. Will the cost of living in Japan get any better, perhaps not, but getting paid on time will.
While these provisions represent a significant step forward for Japan, how do they compare to freelancer protections in other parts of the world?
What do freelance economy experts think of Japan’s new Freelance Act?
IPSE’s policy director Andy Chamberlain, tells The Freelance Informer, “It’s great that more countries are adopting tailored measures to strengthen their freelance economies, and Japan’s Freelance Act could make for a model for the UK to emulate. But the biggest challenge would be agreeing on who it would apply to.”
The UK will need to go through this too if we want our labour market to remain a globally competitive and attractive place to go into business on your own. Our notoriously complex employment status rules can often make it difficult to prove that a self-employed engagement is legitimate.
Andy Chamberlain, IPSE Policy Director
So, how does Japan’s Freelance Act stack up to the UK’s legal frameworks for the self-employed?
Chamberlain responds, “Japan’s Freelance Act goes further than current UK legislation, with specific provisions against unreasonable demands in contracts and consideration for family circumstances. We know that the Labour government plans to consult on a right to a written contract for self-employed individuals in the UK, and legislation that notionally limits commercial payment terms to 60 days already exists in UK statute – but, as we know, is routinely ignored. So, the true test of Japan’s Freelance Act will be whether the Japanese government has the means and will to enforce it.”
Chamberlain says Japan’s Freelance Act is “further proof that advanced economies are getting to grips with the modern world of work and beginning to create some standardisation for freelancers within it.”
However, he says, “The UK will need to go through this too if we want our labour market to remain a globally competitive and attractive place to go into business on your own. Our notoriously complex employment status rules can often make it difficult to prove that a self-employed engagement is legitimate. What’s more, governments have historically adopted a quite narrow view of what a ‘freelancer’ is when raising disputes over employment status. I fear that even if an act were introduced today, many who have long considered themselves freelancers would get left out.”
What’s happening in other markets?
European Union:
- The EU has taken a more proactive approach with the Directive on Transparent and Predictable Working Conditions (2019/1152). This directive mandates minimum rights for all workers, including freelancers, such as the right to written terms, limitations on probationary periods, and protection against unfair dismissal
- Individual member states also have their own legislation. For example, France has a specific legal status for freelancers (“travailleur indépendant“) with associated social security and pension schemes
United States:
- The US offers a patchwork of protections at the federal and state level
- The Fair Labor Standards Act (FLSA) sets minimum wage and overtime requirements, but these don’t always apply to freelancers depending on their classification
- California’s AB5 law attempted to reclassify many independent contractors as employees but faced legal challenges and revisions
- Overall, US freelancer protections remain fragmented and inconsistent
Japan’s Freelance Act, in comparison, seems to offer a more comprehensive and cohesive framework than some of these more established markets. Its emphasis on clear contracts, timely payment, and protection against unfair practices sets a strong precedent. However, its effectiveness will depend on enforcement and how it adapts to the evolving nature of freelance work.
